When buying an electric vehicle, consumers want an experience that matches their expectations of the car itself. That is, something exciting and innovative but also reliable and predictable. They expect to both transact online and negotiate with a real person, and they still need to take a test drive. However, the overall experience needs to be more seamless, more personalized, and more flexible than it was in the days of forecourt walkarounds.
These are some of the findings of McKinsey’s latest Future of Auto Retail consumer survey,1 which polled more than 4,000 respondents globally, focusing on consumer sentiment around electrification, the car-purchasing experience, and innovations in automotive retail. The findings show that consumers expect an excellent experience but are not always sure that the industry is ready to meet their needs.
In this article, we show how growth in demand for electric vehicles (EVs) is shaping the automotive retail journey. While consumers enjoy digital interactions, they are concerned about factors including opaque pricing, complexity in the configuration process, and variability between dealer offerings. When it comes to test drives, consumers are increasingly interested in new formats, including testing virtually or at home.
What do these shifts mean for the automotive retail industry? First, that companies must embrace bold decisions and innovation to meet the needs of digital consumers. Also, as attitudes evolve, that new entrants will shake up the market. The key for all market participants will be to keep a close eye on trends and be ready to respond with features that excite consumers and support long-term demand.
Intent is accelerating
More consumers than ever are considering buying an EV (Exhibit 1). According to the McKinsey Mobility Consumer Pulse Survey, the proportion of consumers considering battery-electric vehicles (BEVs) rose by five percentage points to 20 percent between December 2021 and December 2022, while the proportion considering a plug-in hybrid (PHEV) rose by four percentage points to 22 percent.2 The survey also shows a four-percentage-point drop in EV skepticism by consumers, from 23 percent of consumers who categorically do not want to switch to EVs, to 19 percent.
Increasing comfort with online buying
In a world dominated by digital engagement, consumers’ first instinct when considering a car purchase is to go online. One in three buyers say they will not only research but also buy online for their next car purchase, citing simplicity and speed as key drivers. In China, more than half of respondents say that they would buy a vehicle online, regardless of power train choice. In other geographies, online purchasing is more favored among EV buyers, with twice as many choosing online over physical transactions.
Despite enthusiasm for digital, traditional approaches remain popular. Forty-four percent of consumers say that they value a personal connection, and 40 percent say that they appreciate the opportunity for price negotiation. Indeed, only 24 percent say they want an entirely human-free experience.
Brand loyalty put to the test
In times of systemic change, consumers are more willing to abandon long-standing loyalties. This presents a test for established brands (Exhibit 2). More than 50 percent of respondents say they may try a new brand when they switch to electric. And if only BEVs are considered, the proportion rises to 70 percent.
Consumers are not wowed by the purchasing experience
Of consumers who bought a car in the past three years, only 53 percent say they were very satisfied with the experience. Top pain points included price transparency, vehicle availability, and process complexity (Exhibit 3). In addition, as supply chains catch up in the wake of the COVID-19 pandemic, lack of availability for test drives and long delivery wait times are high on consumers’ minds.
Some pain points are more acute in the EV space. Thirty-three percent of consumers say that they regret a lack of options for personalized configurations, compared with only 25 percent of traditional car buyers. Meanwhile, 33 percent demand a smaller set of preconfigured options, and 28 percent want the opportunity to change configuration postpurchase and predelivery, compared with only 20 percent of traditional car buyers on both counts.
When asked about potential adaptations and innovations in the purchasing process, respondents’ top preferences include simplicity, convenience, higher levels of personalization, and greater price transparency—all core features of the digital experience. Future EV buyers place more emphasis than traditional buyers on simplicity and personalization in the vehicle-selection process (Exhibit 4).
Test drives are a key battleground
Few people want to buy a car without test driving it first. Indeed, across both the combustion engine and EV categories, 87 percent of consumers say they want to test drive before purchasing, and the proportion holds steady across demographics and geographies. Given the different experience offered by electric vehicles and consumers’ common lack of knowledge of EVs, test drives are even more important in that segment. Reasons include getting a feel for performance and handling (61 percent) and comparing the electric car with their current one (45 percent). EV buyers also want to learn about charging.
Consumers are open to new test drive formats, including at-home test drives, rentals, and even virtual-driving experiences, cited by 53 percent of Chinese respondents as a possibility (Exhibit 5). Many consumers are willing to pay for a home test drive. Globally, 80 percent of consumers say that they would pay at least $25, and more than half would pay up to $100 for the experience.
Market participants must plan for disruption
The trends shaping the automotive retail landscape are powerful and impact almost every aspect of the customer journey. In addition, the evolving landscape brings complexity, with consumers demanding more innovation and convenience but also remaining attached to aspects of the traditional experience. There is a sense of fluidity in attitudes that opens the market to increased competition. As demand for EVs continues to rise, we expect these trends to deepen and accelerate. To optimize their performance, both incumbents and new entrants need to think carefully, seek out pockets of value, and be flexible in meeting changing consumer needs.
